From the October 2020 issue of HealthCare Business News magazine
By Valerie Dimond
As healthcare continues its evolution, so too does the job of healthcare technology management (HTM) professionals.
These days, they’re participating in contract negotiations regarding which equipment to buy, something HTM departments didn’t do 10 to 15 years ago. Heidi Horn, vice president, global enablement-healthcare for Nuvolo, recently hosted a webinar entitled, Cutting Costs Through Your Hospital Maintenance Without Compromising Quality, where she shared financial insights derived from 20 years working in a centralized HTM department at a 24-hospital health system with over 95,000 clinical devices. Horn also served as the department’s vice president for 12 years.
“The consensus is 2020 will be an unforgiving but transformational year for the healthcare industry,” she said. “Financially, things went from bad to worse for healthcare providers in a few short weeks due to COVID.” In this climate, the need for efficient spending is more critical than ever.
The cost of maintaining and managing equipment starts with in-house HTM and facilities staff salaries, but there’s also non-contracted vendor labor and non-contracted parts and supplies. “And then you have your contracts for HTM and facilities,” she said. “Those contracts could be with the original equipment manufacturers; they may be with the independent service organizations, or parts vendors, or most likely a variety of these organizations.”
Knowing exactly how each of those costs are budgeted is essential. Does it happen in one cost center, in the HTM and facilities department, or dispersed across many different departments? You may need to examine each clinical department separately to figure out your total spend on clinical equipment maintenance.
Many providers will try to compare their cost of maintenance to other organizations to see where they stand but that can be difficult, as inventories have different variables. A large hospital will have more inventory than a smaller one and a teaching or research hospital tends to have a higher value of equipment with more maintenance, compared to a non-critical hospital.
“What we use to compare these different values is what we call the cost of service ratio (COSR),” Horn explained. “It shows the ratio of the cost to buy the equipment and the annual cost to maintain it. COSR equals the annual total cost of maintenance divided by the acquisition cost of the equipment. Low-cost clinical equipment maintenance programs have a ratio roughly between 4% and 6%. That seems to be the industry standard. High-cost programs can be as high as 12%.”